Basic Principles of Marketing (pdf)

Running Head: PRINCIPLES OF MARKETING 1
PRINCIPLES OF MARKETING-FORD MOTOR DRAFT 4
Jennifer Bean
Liberty University
Principles of Marketing 330

PRINCIPLES OF MARKETING 2
Company Goals
Ford Motor is a multinational automotive company founded by Henry Ford in 1903 and
whose headquarters are based in Michigan. The company is divided into two brands, Lincoln
brand which sells luxury cars and ford brand which sells commercial vehicles and automobiles
("Ford Motor Company: Company Information | Ford.com," n.d.).
i. Improving fuel economy for all products while adhering to regulations and
addressing stabilization of the climate
ii. Delivering the Company’s smart mobility plan through embracing budding
prospects in mobility
iii. Growing the company’s annual car sales to 9.4 million representing 45-55% by
the year 2022
iv. Extensively Increase its share in the markets of Europe, Middle East Africa, and
Asia-Pacific
v. Continued support for women and minority-owned business through material
sourcing
vi. Reduction of the company’s environmental footprint through sharing of best
practices and collaboration with selected suppliers.
vii. Helping suppliers in establishing their ability to handle sustainability issues
touching on their supply chain.
viii. Adherence to their the commitment to promoting and protecting human rights and
local laws through their manufactured and sourced products
ix. Saving water used in the manufacturing by 30% by the year 2020
x. Reducing the amount of Carbon Monoxide emitted in the production process for
each vehicle by 30% by 2025.
xi. Continued promotion safe driving practices through the provision of information
and educational programs
xii. Meeting or exceeding regulatory safety requirements through designing and
manufacture of vehicles with driver assist and innovative safety technologies

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xiii. 40% Electrification of the company’s lineup by the year 2020
xiv. Continued provision of services and programs focused on employee
empowerment for the achievement of well-being and health of their employees
("Ford Motor Company Official Global Corporate Homepage ...", n.d.).
Situational Analysis
Product Situation
There are two core products of the company which includes the luxury cars and
commercial vehicles. The luxury car products of the company use the state of the art technology
to provide enhanced comfort to the customers of the market. In terms of the commercial cars of
the company, the management has goals to improve the fuel economy so that it can attract more
customers of the market. Einwiller & Steilen (2015) stated that fuel economy of the cars is one of
factors that influence buying decisions of the customers of the market.
Key Competitors
The behaviors of the competitors are different based on the different segment of cars.
While the competition in the luxury car segment is tough, the competition in the commercial car
segment is less fierce. Audi, BMW is two of the main competitors of ford. Both the rival
companies of ford spend more than 6.5 billion USD each year for R&D (Xing & Tzeng, 2017).
This allows them to stay updated with modern technology which can be used in the production of
the cars.
FORD MOTORS is into manufacturing both luxury cars and commercial cars. The rate
of competition differs based upon the types of products pitched by the company. The
competition is more severe in the segment of luxury cars, whereas it is less stringent with respect
to commercial cars section. FORDS has received the maximum of its competition from Audi,
BMW.
The segmentation patterns of AUDI and BMW are based upon the income status of the
population. As mentioned by Rozdolskaya & Ledovskaya (2015), Audi and BMW have a loyal
customer base that is ready to pay the high prices for the cars. The themes used by the

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competitors for attracting the target customer groups are-comfort design, safety features and
brand image.
Advantage to Key Competitors
AUDI, BMW spends 65 million US dollars every year in its research and development
activities. These activities help the company in being update with the latest technology which
provides them with a competitive advantage. As mentioned by Güçdemir & Selim (2015),
psychographic segmentation pattern is used to attract the target customer group. The brand
image associated with Audi and BMW further provides them with a competitive advantage over
some of their similar market players (bmw.com.au, 2018). The additional amount of emphasis
upon the safety features has made the brand a favorite among the target customer groups.
Distribution Situation
The distributional channels used by Ford Motor Company are almost same as the
distributional channels used by the other companies of the market. For the luxury segment of the
cars the company takes order to customize the products. It is done through the retail outlets
where the commercial vehicles are supplied directly for sales. However, in case of international
business, the company also uses the licensing channels to distribute the cars of the company.
Environmental Situation
The manufacturing of the both the class of products requires a lot of water. Apart from
that, the manufacturing units also emits lots of harmful chemicals and gasses in the neighboring
environment degrading the quality if the environment. The degradation of the environment can
significantly affect the performance of the company in the future. The management of the
company also has goals in the future to reduce the use of water in the production process Laari-
Salmela, Mainela & Puhakka (2015). Apart from that the goals of the company also includes the
reduction in the emission of carbon mono-oxide so that the environmental degradation is
lowered.

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Opportunity and Threat Analysis
The number of potential customers is expected to rise soon due to the projected increase
in the income level of the customers. One of the major markets for the commercial cars of the
company is the emerging markets. Shane & Magnuson (2016) showed that, in the coming years
the mean income of the people in the emerging market is expected to rise. This is due to the
increase in the number of middle class people in the emerging economy. Thus, in terms of the
commercial cars, the company has a lot of opportunity. However, luxury car segments run on the
principle of customer loyalty and hence technological excellence of the rival companies of the
market can come as an important threat to the company.
Target Market Segment
The current study focuses upon the principles of marketing which takes into
consideration the different approaches used for manufacturing and delivery of products from the
sellers to the end users. In the current study, the Michigan based automotive company FORD
MOTORS have been taken into consideration. The company is divided into Lincoln brand which
sells luxury cars as well as the FORD MOTORS which sells commercial vehicles. The
assignment helps in the identification of the key market competitors and the strategies
undertaken for gaining a competitive advantage.
Strategy to Attract Target Market Segment
A few strategies had been used by the company to attract the target customer segment.
The effectiveness of some of these strategies has been evaluated with respect to the FORD
MOTORS. The FORD MOTORS have been supporting the subject of women empowerment by
providing continuous support for women and minority owned business through material
sourcing. Program such as safe driving practices have been promoted by the organization to
reduce the health hazards of the vast customer niche. Some of these initiatives have been seen as
philanthropic activities promoted by the company. As mentioned by Foxman & Dobscha (2015),
the philanthropic activities are seen as a part of meeting with the corporate social responsibilities.
One of the huge steps taken forward by the company in this regard is designing and
manufacturing vehicles with driver assist and innovative safety technologies. Some of these

PRINCIPLES OF MARKETING 6
changes have been incorporated with the view of reducing the number of road accidents along
with providing additional security layers to the target customer group. Therefore, the additional
safety features could be huge step forward in attracting the maximum number of customers.
As mentioned by Armstrong, Adam, Denize & Kotler (2014), activities promoted by the
company such as reduction in the amount of carbon monoxide footprint has also been seen to
contribute significantly towards the preservation of environment, which has been seen to attract
the social as well as the environmental activists.
FORD has been producing several multipurpose vehicles such as luxury cars, station
wagons, vans, trucks etc. The company has recently ventured into the production of FORD
FIESTA which is highly in demand amongst the ladies and the youth. Some of the customer
segmentation approaches used over here are –geographic, demographic, psychographics and
behavioral. Recently the FORD MOTORS have taken into consideration demographic factors
such as the age, gender and income status of the population. The car has been designed with
features such as safety and fuel efficiency. Hence, the FORD MOTORS are combining design
with technique and making them available at affordable prices (ford.com.au, 2018).
One of the crucial features of marketing is effective customer segmentation, which helps
in offering tailor-made solutions to the target customer group. Based upon the effective customer
segmentation policies used by a company the marketing highs are met. The marketing principles
cover the ethics and norms which are used by a business organization to maximize their
customer satisfaction rate as well as enhance productivity of an organization. The assignment
discusses the several strategies which are undertaken over here to increase the production value
of the organization.
Pricing Strategy
Ford Motor concentrates on assembling of two types of vehicles; the luxury cars and
commercial cars or rather automobile cars. This, therefore, calls for different pricing strategies to
be employed so as to be able to a high number of sales compared to their competitors Audi and
BMW car model. (Ferguson, 2017) The Ford motor company, therefore, has employed several
pricing strategies to achieve the maximum sales and profits. The following are the strategies;

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Auto Spare Part Pricing Strategy
The ford company as stated above, ventures in assembling both luxury cars as well as
commercial and automobile cars. In most cases, the commercial vehicles require often
maintenance due to tear and wear of some parts. This makes them, during choice making on the
car model to purchase for their commercial activities, settle for a car that has cheap and readily
available spare part. With this information and knowledge, the ford car company has employed
the auto spare marketing strategy as a way of encouraging potential customers to buy their cars
with an assurance that in case of spare parts need, they can easily and affordably acquire them.
(automobile consulting group, 2015)
Market-oriented Pricing Strategy
One of the main goals and motivating objectives of the ford car company is setting up
product prices that tally with the market conditions after considering the current market
competition, demand and consumers point of view. The ford company employs this strategy
more so to the trucks and sedans that it produces.
Premium Pricing Strategy
This is a strategy that depends on the price point of a product and psychological image of the
product to the users or customers. The ford company uses the premium strategy as a way of
establishing its product image to be a high-quality product in the consumers’ minds. They use
this product to create a picture that their car models are of high quality than their competitor’s
and therefore the prices too should be high. Majorly this strategy is applied to their luxury car
models. This creates some positive perceptions of the willing buyer that the car must be of higher
value than competitors. (Woodruff, 2018)
Pricing Strategy for Owner Advantage Programme (Key-b-gone)
Ford has a specific policy while dealing with the cars with the key-b-gone features. It is a
celebration of the years of loyalty of all its premium clients. The key-b-gone features are a
testimony to the new advanced R&D experiments undertaken by experts at Ford and a token of
appreciation for all the age old and prospective clients of the company. The company is focusing
on the launch of a series of cars in the year 2019 and topping the list is the brand new Focus

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series and various other cars, which are aimed at the prospective customers of the company
(‘Ford Owner Advantage Rewards program | Ford.ca’, 2018). It is priced at $17,930 which is
decreased by $2,300 from its previous segment of car (Owner.ford.com, 2018). The aim has
always remained to attract customers on the basis of the key less push button feature, which is
the most prominent part of the entire Key-b-gone feature of the cars. The prominent features of
this pricing strategy has been listed below:
 It is commonly used to reach a wide range of customers on the basis of the positive
word of mouth, as it is assumed that the low prices would act as a major motivating
force behind this positive word of mouth marketing strategy.
 This is created with the aim of providing the consumers a smart driving experience
with a hassle free approach to driving. It is one of the most ambitious to have ever
come out of the Ford factory, solely with the aim of providing a key be gone
experience.
 One of the most important prospects of Ford, in order to use this strategy is to reward
its customers of the KGB’s Owner Advantage Program, by providing quality and
luxurious which satisfies the atmospheric standards, at very affordable prices.
 Ford will be launching a total of seven models under this genre with an average price
of the model being set at only $21,810. The prices of all these seven models have
been listed below, which would help in providing a comprehensive view of the low
prices which have been set in order to provide the benefits to the KBG’s special
customers under the Owners Advantage program (‘Ford Owner Advantage Rewards
program | Ford.ca’, 2018).
The price list of all the seven models which have been would be launched under this scheme:
Car name Price (in US $)
Ford Eco sport 22,046
Ford Focus 17,950
Ford Mustang 27,780
Ford Fiesta 15,345
Ford Explorer 32,605

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On analysis of the past five year trends of the Ford Focus group, it could be seen that the
company has maintained an affordable average of less than $25,000. With the launch of the Ford
Focus Active, the same pricing strategy of penetrative pricing would be followed to provide
benefits to the loyal customers under the KBG’s Owners Advantage Programme. This acts as a
significant strategy of retaining the premium customers and is being extensively used to in
association with the Key-b-gone features of the new Focus Active cars, which are due in early
2019.
(Source: CarGurus.us, 2018)
In terms of the comparison of Ford’s key less push button feature with its other competitors,
some important factors have led to the changes in the pricing strategy of Ford, in order to adjust
to the activities of its competitors. Whether its Audi’s key less push button system or BMW,
Porsche or any other car making company, the pricing strategy of Ford, in terms of the cars
equipped with the smart push button is the most reasonable and pragmatic strategy. The prices, if
seen from these competitors point of view is quiet high, in case of those cars which have the
push button features.
Cars Prices
Nissan Terrano 15,873

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Volkswagen Polo 12,700
BMW X3 77,777
Mahindra XUV500 19,555
Audi RS5 158,730
It is better to gauge the market conditions before it is time to raise the prices. If the key less
feature never goes well with the customers and their demand, their production and selling would
be disastrous for the company. Thus, penetrative pricing, where the prices are being deliberately
set at a low level, is more pragmatic.
\
Leasing or Renting Luxury Cars
One of the objectives of the ford company is to satisfy its customers’ demands for
comfort and also reach out to the luxurious demands several groups of people that are less or
relatively wealthy class and cannot afford expensive luxurious cars. This, therefore, saw it as the
need on a way in which the company can satisfy the demands of those who cannot afford these
cars. Leasing and renting them cars is a perfect pricing strategy and move that makes them end
up selling a good number of their cars. One can drive their ford dream car by leasing the car for a
given period of time depending on the agreed terms. This makes them to later purchase them due
to the level of comfort they achieve. Leasing means one is paying for a car only as much as one
uses it, although the ownership remains with the leaser. At the end of the agreement, the lease
can fully own the car and thus a good pricing strategy. (Laja, 2017)

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